Employees at eHealth Ontario will share $2.3 million in performance bonuses in the wake of a court settlement that restored payouts cancelled amid controversy in 2011, the Star has learned.

A spokesperson for Health Minister Deb Matthews said the court settlement with eHealth employees last year was made “in order to avoid lengthy and costly litigation, which could have cost millions more.”

Employees at eHealth Ontario will share $2.3 million in performance bonuses in the wake of a court settlement that restored payouts cancelled amid controversy in 2011, the Star has learned.

A total of 704 staff at the provincial agency tasked with creating electronic health records for every Ontarian will get between $500 and $7,000 each at a time when Premier Kathleen Wynne’s minority Liberal government is struggling to erase an $11.7 billion deficit.

A memo went to all 875 eHealth employees Thursday, many of them information technology experts, just in time for delivery of post-holiday credit card bills.

“I want to let you know that all eligible employees will receive the 2012-13 incentive payment on the January 10, 2014 payday,” said the email from Allan Gunn, vice-president human resources.

“The incentive payments are based on your performance rating during fiscal 2012/13 and calculated on the annualized salary of the same year.”

A copy of the memo from eHealth — the subject of a 2009 expense account scandal in which some consultants paid up to $3,000 daily charged taxpayers for tea and cookies — was obtained by the Star.

“It’s in keeping with the government’s austerity plan,” eHealth spokesman Rob Mitchell said Thursday, noting the payouts for meeting performance objectives are 50 per cent less than the 2011 bonuses and similar to amounts paid after that.

“We have to be mindful of what the private sector pays because we recruit from a very competitive environment in information technology.”

EHealth found itself in a bind in 2011 when the Star revealed staffers had been promised merit raises and bonuses in writing despite a government wage-freeze edict.

With the 2011 election months away, former premier Dalton McGuinty’s government cancelled the 1.9 per cent merit raises and bonuses averaging 7.8 per cent that were intended to keep eHealth’s specialized workforce from being poached by high-paying information technology firms.

That prompted employees to file an $11-million class action lawsuit, which they won last year, resulting in a negotiated $7.16-million court settlement.

Former eHealth chief executive Greg Reed, who was forced by Health Minister Deb Matthews to scrap the bonuses in 2011, left the agency last fall with severance pay of $406,250 — almost double the premier’s salary of $210,000.

Sources said eHealth has received legal advice that it would be vulnerable to another employee lawsuit that would be cost taxpayers more if it did not pay performance bonuses for targets met.

A spokeswoman for Matthews said public agencies must be mindful of the tight financial circumstances the government faces.

“Our government’s expectation is that during this difficult financial period, our partners in the broader public sector and those at the head of organizations must lead by example and all organizations must be fiscally responsible,” Samantha Grant said in an emailed statement.

She said the court settlement with eHealth employees last year was made “in order to avoid lengthy and costly litigation, which could have cost millions more.”

“The Ministry of Health and Long-Term Care has confirmed that the performance payments going forward are commensurate with the payments in that settlement,” Grant added.

Wynne’s administration, which could face an election as early as this spring, has said it will introduce legislation once MPPs return after the Family Day holiday to control the pay of senior executives in the public sector, including salary caps, Grant said.

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